Friday, March 28, 2008

Although Gov. Rick Perry's proposal to turn the Texas lottery over to a private contractor fizzled out last year, he still supports the idea because he thinks it could generate billions of additional dollars for health or education programs, his spokesman said Wednesday. Texans for Public Justice issued a report this week suggesting that any company wishing to buy or lease the lottery would probably want more gambling in Texas to maximize the profitability of such a venture.

Perry still backs sale of lottery

By JOHN MORITZFort Worth Star-Telegram Staff Writer

AUSTIN--Although Gov. Rick Perry's proposal to turn the Texas lottery over to a private contractor fizzled out last year, he still supports the idea because he thinks it could generate billions of additional dollars for health or education programs, his spokesman said Wednesday.

"We have over 200 years of capitalist history that suggests the private sector can do a better job of running a business than state government can," said Perry press secretary Robert Black. "No matter what you might think of the lottery, it's a very valuable state asset that is not going away. So it would be prudent to take a look at whether it could be used to generate more state dollars for education, healthcare or cancer research."

Black's comments came after an Austin think tank issued a report suggesting that any company wishing to buy or lease the lottery would probably want more gambling in Texas to maximize the profitability of such a venture.

Black said the report, by Texans for Public Justice, was overly speculative because the state has yet to conduct a detailed study of how much the lottery might be worth to a company or how much additional gambling might be needed to generate the desired profit.

The lottery, overseen by a three-member commission appointed by the governor, is already a public-private venture. A private company operates many of the games and helps with marketing.

The lottery generates about $1 billion annually for the state, and that money helps pay for public education.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he'd be open to selling or leasing the lottery if it could be shown that the state would come out ahead.

"It's a matter of price," Ogden said. "If somebody comes in and promises to give us more money than we're making now, I'd be for it. If they can't, I won't. It's pretty simple."

But Ogden said such a deal would appeal to him only if the company stuck to lottery games. "If they want to use it as a vehicle for casinos and slot machines, it ain't going to fly," Ogden said.

When the Legislature convened in January 2007, Perry urged lawmakers to give private companies a chance to buy or lease the lottery. The proposal drew little support and was shoved to the back burner.

But records released to Texans for Public Justice showed that several companies offered written proposals to take over the lottery.

Two -- Merrill Lynch and UBS -- suggested that the lottery could be worth well over $20 billion if more than just traditional lottery games were allowed.

Black said the proposals were more like "nice, glossy what-ifs" and "highly educated guesses" than formal offers because there was no legislative go-ahead at the time. But he said the governor will urge legislative leaders to delve more deeply into the issue before lawmakers return to Austin in January.

"It's important for us to have a solid understanding of what the actual value of the lottery is," Black said, adding that the governor's office is no longer in discussions with any companies interested in operating the lottery.

Ogden's committee is expected to examine issues surrounding privatizing the lottery this year, but no hearings have been scheduled, he said.

He also said that because of the slowdown in the economy, the interest from the private sector may have waned since last year.

"I'm not sure how many folks out there want to risk that kind of capital given the current state of the economy," Ogden said.